The impact of warming on food consumption

Abstract

ABSTRACT We provide new evidence on the effects of temperature on farm income, non-farm income, and real food expenditure. We first apply a Heckman model to a large household dataset (10,200 observations) from Ghana in order to fit farm and non-farm income and then subsequently estimate a 3-stage least squares model. Consistent with our expectations, we find that income determines real food consumption. The elasticity of consumption of farm income (0.44) and non-farm income (0.33) are both positive and less than one. The difference in elasticities is statistically insignificant. We find an inverse relationship between the two types of income. Compared to non-farm income, we find that temperature has a larger negative effect on farm income. Warming also impacts negatively on real food consumption. For a typical adult, a 1°C increase in temperature results in a 4% decline in real food consumption. The decline in food consumption can be attributed to the negative effect of temperature on land and labour productivity. In the absence of microlevel adaptation, our results show that general welfare levels in Ghana will likely decline with warming.